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Avoid unwanted card fees when travelling abroad

Avoid unwanted card fees when travelling abroad

Category: Travel

Updated: 18/07/2016
First Published: 18/07/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

As holidaymakers prepare for their trip abroad, they may begin to realise that their travel cash will not be going as far as before. Thanks to fluctuating exchange rates, buying £200 worth of Euros today means €49 less spending money than a year ago, and a similar picture can be seen when buying £200 worth of dollars, with almost $48 less back compared with 2015.

With this in mind it is vital for consumers to save cash where they can, and one way to do this is to be wary of using cards abroad.

You may think that using your card abroad will cost the same as in the UK, but in most cases, you'd be sadly mistaken. Indeed, our latest research shows that some debit cards can charge £9.50 for a £200 cash withdrawal, while credit cards can charge £11.96 for the same transaction – an unnecessary expense when there are fee-free cards specifically designed for use abroad.

The table below outlines the top cards for use abroad, and unlike with most cards designed for UK spending, they won't charge you extra fees for foreign use:

Credit Card
Debit Card Prepaid Card (Euros €)
Best cards for use abroad MBNA - Everyday Plus Amex Norwich & Peterborough BS - Gold Account My Travel Cash - Currency Cash (Euros €)

"In the run-up to the school holidays it's clear to see why holidaymakers will be less than impressed, with exchange rates falling just as they're preparing to get their holiday cash," said Rachel Springall, finance expert at Moneyfacts. "With less cash in their pockets, those travelling abroad must make sure they don't lose any more of their money when using debit or credit cards through unnecessary fees. Most cards will charge customers for use abroad, so planning ahead is vital."

Cash isn't always king

While carrying a bit of cash when travelling is always handy, going all-out may not be ideal, as there's the danger of running out of money in emergencies or losing it at inopportune moments. This isn't the case with debit or credit cards, nor with prepaid cards – not only can they make it simpler for people to track their spending, but they can be a lot more secure than carrying around bundles of cash, and if lost they can be cancelled and the funds preserved.

Of course, the only downside is using cards that charge for each use, and as Rachel explains, one of the most expensive transactions is withdrawing cash from an ATM.

"A typical debit card charges £9.50 when consumers withdraw £200 in cash abroad, and this will apply every time the debit card is used," she said. "There is typically a 2.75% to 2.99% conversion fee on the amount you spend on top of a set charge for ATM withdrawals, which can be between £1 and £5 for each transaction.

"The equivalent withdrawal on a credit card can cost £11.96 before interest applies, but the reality is that all of these charges could be avoided if consumers used a card specifically designed for use abroad, which can be much more cost effective. For example, MBNA, Creation Financial Services and Halifax all offer credit cards that charge absolutely no fees when used overseas."

Reluctant to take out a credit card?

While a travel credit card can be a great way to make the most of your spending money, many people are understandably reluctant for fear of getting into debt. These cards may be useful but they still charge interest on purchases and cash withdrawals, much in the same way as in the UK, so unless you're completely organised and pay the balance off in full when you return, there's the chance that it could cost you more than you bargained for.

In this case, a new current account could be a more attractive option, such as Norwich & Peterborough Building Society's Gold Account which offers a debit card with no fees for use overseas, which could make it perfect for those who frequently travel. And what about prepaid travel cards?

"Those holidaymakers hoping to stick to a tight budget may prefer to pack a prepaid card for overseas use, where they can load their spending allowance onto the card in advance," explained Rachel. "These are also a safe payment method as they can be replaced if lost. The best cards won't charge for ATM cash withdrawals either, making them perfect for buying goods in shops that do not accept card payments.

"It's never been more important for holidaymakers to try and make their money go that little bit further, and if they carefully plan ahead they can avoid those unnecessary fees when using a card abroad."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.